## Facts

- Jeffrey Prochnow was a licensed real-estate agent working for Apex Properties, Inc., doing business as RE/MAX Choice of Bloomington, Illinois.
- Prochnow and RE/MAX operated under a 2006 Broker–Realtor–Associate Contract that paid Prochnow by commission.
- Under the Contract, a commission would not be paid to Prochnow until the real-estate transaction closed and RE/MAX actually received the commission.
- Prochnow filed a Chapter 7 bankruptcy petition in August 2009.
- In his bankruptcy schedules, Prochnow did not list any right to commissions or other contingent/unliquidated claims, and he did not disclose the Contract as an executory contract.
- Prochnow continued working for RE/MAX after filing, through January 2010.
- The bankruptcy case closed in February 2010.
- Certain transactions that Prochnow had worked on (at least in part) before the petition date closed after the petition date, and RE/MAX received commissions from those closings.
- RE/MAX did not remit those amounts to Prochnow; instead, it applied the funds against pre-petition amounts Prochnow owed RE/MAX (such as fees and expenses under their arrangement).
- In June 2010, after the case had closed, Prochnow moved to reopen the bankruptcy case seeking payment of the commissions and asserting that RE/MAX’s conduct violated the automatic stay.
- The bankruptcy court ruled for RE/MAX, concluding that the commissions were property of the bankruptcy estate and that Prochnow was judicially estopped from pursuing the commissions because he had not disclosed the interest in his schedules. The court also denied his request for relief based on an alleged stay violation.
- Prochnow appealed to the United States District Court for the Central District of Illinois.

## Issues

1. Whether commissions paid after the petition date, tied to transactions that closed after the petition date but arising from Prochnow’s pre-petition contractual and sales efforts, were property of the Chapter 7 estate under 11 U.S.C. § 541.
2. Whether Prochnow was judicially estopped from asserting a right to the commissions after he failed to disclose any commission interest (and the underlying contract/claims) in his bankruptcy schedules.
3. Whether Prochnow could obtain relief against RE/MAX for an alleged automatic-stay violation based on RE/MAX’s retention/application of the commissions.

## Decision

- The district court affirmed the bankruptcy court’s rulings.
- The court held that the post-petition commissions at issue were property of the bankruptcy estate because Prochnow’s interest in them stemmed from his pre-petition contract and pre-petition work, even though payment depended on post-petition closings and receipt of the commission by the broker.
- The court agreed that Prochnow’s omission of the commission interest and related contractual rights from his schedules supported judicial estoppel, barring him from later asserting the commissions for his own benefit.
- The court affirmed the denial of Prochnow’s motion seeking relief for alleged violations of the automatic stay in connection with the commissions.

## Legal Principles

- Property of the estate under 11 U.S.C. § 541 includes contingent and unmatured interests that exist as of the petition date, even if payment is conditioned on later events.
- Compensation received after a Chapter 7 filing may be estate property when the debtor’s right to payment is based on pre-petition services and a pre-petition contract, notwithstanding a contract term delaying when the commission becomes payable.
- A debtor must disclose all assets and potential assets in bankruptcy schedules, including contingent rights to payment and contract-based claims.
- Judicial estoppel may bar a debtor from pursuing a claim or asset not disclosed in bankruptcy where the debtor took an inconsistent position under oath and obtained the benefit of the bankruptcy process.
- When the dispute concerns property of the estate, the trustee is generally the proper party to assert the estate’s rights; a Chapter 7 debtor’s ability to seek personal relief tied to estate property is limited.

## Conclusion

The district court affirmed the bankruptcy court’s determination that Prochnow’s post-petition real-estate commissions, arising from pre-petition contractual rights and pre-petition work, were property of the Chapter 7 estate, and it further affirmed that Prochnow’s failure to disclose the commission interest in his schedules barred him from later asserting a personal right to those commissions or obtaining stay-based relief against RE/MAX.


Prochnow v. Apex Properties, Inc., 467 B.R. 656 (2012)